Monday, June 07, 2010

Quotes of the day

There is no way to take the risk out of life. When government tries, all it really does is transfer that risk elsewhere. And without the growth and advancement that freedom brings, the system breaks down and wealth creation is undermined. You can’t get something from nothing. The fruits of freedom are only available to those who are willing to take the risks of freedom. Let’s not forget that lesson.--Brian Wesbury and Robert Stein

When it comes to your children, the books in your house matter more than your education or income.--Laura Miller

Finding alpha is about finding your comparative advantage in your work. As David Ricardo noted about comparative advantage, it exists regardless of one's absolute advantage, it's what one is relatively best at, basically, one's most productive activity. When you find it, you are literally being all you can be. ... One important refinement of this idea is that there's a difference between current and permanent value: Pets.com vs. Google, the works of John Kenneth Galbraith vs. Ludwig von Mises. They might, at one time, have generated the same appreciation, but one faded, the other proved highly prescient. One's sense of whether one is creating permanent value, irrespective of current rewards, is important as well, because its rather ghastly to think one's lifework will be seen like past experts in quack homeopathy, irrelevant if not a joke. ... In the end Marcus Aurelius notes that popularity counts for nothing, "we're all forgotten. The abyss of endless time that swallows it all. The emptiness of those applauding hands." So, live for creating value in the lives of those around you, value that is appreciated and will be missed because it is real. If you create real value, things that with the passage of time retain their admiration, as Brooks suggests, that will probably make you happy, which isn't nothing.--Eric Falkenstein

A better defense of capitalism is to focus on capitalist virtues. In "The Pursuit of Happyness," for example, Chris Gardner, a struggling salesman played by Will Smith, confronts adversity with hard work, creativity, ambition and intelligence. "The Pursuit of Happyness" is syrupy at times, but the story of Gardner's rise from homelessness to a successful job as a stockbroker is full of drama and uplift, which makes it all the more surprising that more films don't use the business world as the setting for great cinema. Lots of movies feature people in soul-destroying jobs who finally escape to realize their true selves, but how many feature people who find their true selves in productive work? Not many, which is a shame, since the business world is where most of us live our lives. Like many works of literature, Hollywood chooses for its villains people who strive for social dominance through the pursuit of wealth, prestige, and power. But the ordinary business of capitalism is much more egalitarian: It's about finding meaning and enjoyment in work and production. Michael Moore didn't have to worry that anyone would misinterpret the title of his film, "Capitalism: A Love Story," because in Hollywood no one loves capitalism. That's too bad because Hollywood is one of capitalism's greatest successes. Hollywood brought high quality entertainment to the masses in the same way that Henry Ford brought high quality cars to the masses. Hollywood is great at telling stories but it has yet to tell one of the greatest stories of them all, the story of capitalism, the most humane and productive economic system the world has ever known.--Alex Tabarrok

In a sense, Obama is hoist on his own petard. The man who blames Bush for everything now finds there are some things presidents cannot do. More deeply, the opposition party that persuades the public government can solve all their problems, discovers once in power there are problems their government cannot solve. Alas, it will take more time than they have to learn the next lesson: that governments which try to solve the insoluble, more or less invariably, make each problem worse. ... In so many ways, the trend of post-Christian society today is back to pagan superstitions: to the belief that malice lies behind every misfortune, and to the related idea that various, essentially pagan charms can be used to ward off that to which all flesh is heir. The belief that, for instance, laws can be passed, that change the entire order of nature, is among the most irrational of these. Sheer human stupidity is the cause of any number of human catastrophes -- including the stupidity of superstition itself. We need to re-embrace this concept; to hug the native incompetence within ourselves, and begin forgiving it in others.--David Warren

Our ability to manage large systems and to execute, I think, has been made clear over the last couple of years," Obama said. That executive ability, he added, "indicates the degree to which we can provide the kinds of support and good service that the American people expect.--Barack Obama

[Alan] Kahan's history is that as long as aristocrats at birth were important, intellectuals as a class had something to gain by bringing down these aristocrats, and promoting capitalism did that. Once the birth aristocracy weakened and a strong business class emerged, anti-capitalism became the more natural ideology of the intellectual class. Remember the Masonomic view that politics is about relative group status.--Arnold Kling

Sometimes, advocates of “sin” taxes contend that consumers of certain products impose adverse budgetary externalities on the rest of us — that if the consumption induces, say, smoking- or obesity-related illness, it raises health care costs, which we all pay for through higher taxes or insurance premiums. Yet this argument has a flip side: If consumers of these products die earlier, they will also collect less in pension payments, including Social Security. Economists have run the numbers for smoking and often find that these savings may more than offset the budgetary costs. In other words, smokers have little net financial impact on the rest of us. ... Taxing soda may encourage better nutrition and benefit our future selves. But so could taxing candy, ice cream and fried foods. Subsidizing broccoli, gym memberships and dental floss comes next. Taxing mindless television shows and subsidizing serious literature cannot be far behind. Even as adults, we sometimes wish for parents to be looking over our shoulders and guiding us to the right decisions. The question is, do you trust the government enough to appoint it your guardian?--Greg Mankiw

The need to diet, which we know so well in relation to food, and which runs so contrary to our natural impulses, should be brought to bear on what we now have to relearn in relation to knowledge, people, and ideas. Our minds, no less than our bodies, require periods of fasting.--Alain de Botton

... more oil is spilled from the delta's network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico, the site of a major ecological catastrophe caused by oil that has poured from a leak triggered by the explosion that wrecked BP's Deepwater Horizon rig last month.--John Vidal

One thing that's both disconcerting and exhilarating about physics is how many seemingly simple questions remain unanswered. When you hear the questions that physicists struggle with, you sometimes say to yourself, Wait, you mean they don't even know that? Physics might be defined as the subject that tries to figure out why the world may look incomprehensibly complex at first, but on closer examination is governed by simple laws. Those laws, applied repeatedly, build up the complexity. From this definition, you'd presume that physicists have at least sorted out what they mean by "law". Sorry. Why should nature be governed by laws? Why should those laws be expressible in terms of mathematics? Why should they be formulated within space and time? ... A law not only describes a pattern in nature, but distinguishes between patterns that arise by chance and those that are always there, independent of the particulars of a situation. What this means is frustratingly tricky to pin down, and it gets worse when you talk about the entire universe. If the universe is all there is, how could it have been any different? If it couldn't have, then what's the difference between a chance pattern and an inherent one?--George Musser

While some optimism about Africa’s future is warranted, its future is not assured because Africa still faces important problems. Yes, the private sector in mobile phones, natural resources, and elsewhere has grown a lot in many African countries, but the expansion of private companies has often taken the form of crony capitalism rather than competitive capitalism. By crony capitalism I mean that governments give special protected positions to favored companies in important sectors of the economy rather than allowing competition among companies to determine who are the winners and losers. Crony capitalism is partly the result of a continuing excessive role of the government in the economy. At the same time it encourages government corruption because companies compete politically to obtain these favored positions, partly by bribing government officials to favor them. Crony capitalism may be better than socialist direction of an economy, but is is far inferior to competitive capitalism.--Gary Becker

Mr. Matiullah is one of several semiofficial warlords who have emerged across Afghanistan in recent months, as American and NATO officers try to bolster — and sometimes even supplant — ineffective regular Afghan forces in their battle against the Taliban insurgency. In some cases, these strongmen have restored order, though at the price of undermining the very institutions Americans are seeking to build: government structures like police forces and provincial administrations that one day are supposed to be strong enough to allow the Americans and other troops to leave.--Dexter Filkins

In regard to communist tyrants, Latin American writers often se hacen de la vista gorda, as the Spanish expression goes: They see what they want to see. So is it leftist sympathy that keeps writers from turning Hugo Chávez into a novelistic ogre? Yes, but there's another reason as well. Latin American writers no longer command the kind of attention they did in the so-called Age of Revolution. ... What's more, many Latin American writers have given up on Latin America.--Ilan Stavans

Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money.--Robert Lenzner

FCIC Chairman and former California State Treasurer, Phil Angelides got in a few good quips, but overall the tone was calm and rather boring. I had to laugh when I read some approving accounts of Phil Angelides’ comments, given the role he played over the past decade or so in California’s dismal economic condition. For those who do not know of him, Phil Angelides is hardly a paragon of financial acumen. He was the Treasurer of the State of California during the years (January 1999 to January 2007) when most of the disastrous decisions were made that plague California today. He was also on the boards of California’s woefully underfunded state pension plan during the time period when it embarked on an ill-fated and unfunded increase in pension payouts. California is broke today and Phil Angelides bears at least some responsibility for that.--Kurt Brouwer

When I sit around the table with a bunch of liberal college professors, I am often the most liberal in my attitudes toward today’s students. They mock all the luxuries of today’s college students, like spa services in dorms. And my gut instinct is the same. But my response is; why shouldn’t today’s students have it easier than we did? We are a much more affluent country today than in the 1970s. We grew up in smaller homes with one or one and a half baths; they grow up in McMansions with 5 bedrooms and 4 baths. They have their own cars in college. They don’t want to live in a little dorm cubicle, they want a nice apartment. ... Conservatives tend to look down on the poor. Liberals are more inclined to romanticize the poor. Neither attitude helps in coming up with sensible public policy solutions. Liberals are right that we need some empathy in order to become motivated to address the issue. But once we get to the stage of drawing up legislation, we are better of thinking about the issue with as little emotion as possible. I saw Samuelson taking a clear-headed and reasonable look at a technical issue—how to measure poverty. Thoma thought he was exhibiting a lack of compassion for the poor. The more blogging I do, the more I realize that people see very different things when they read a post.--Scott Sumner

The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America… And we need to do something about it… We are here in Washington, D.C. to address problems. So I've set this goal for the country. We want 5.5 million more homeowners by 2010… economic security at home is just an important part of -- as homeland security. And owning a home is part of that economic security. It's also a part of making sure that this country fulfills its great hope and vision. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time. They've used their influence to create that much capital available for the type of home buyer we're talking about here. It's in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital.--George Bush

I've long been fascinated by the common human illusion that ideas can be sorted into good and bad, when all experience shows this not to be the case. We could play the game all day long where I describe a simply terrible idea and then tell you about the people who got rich implementing it just right. Let's try a few...

How about a comic strip that is literally a bunch of stick figures? It will be called XKCD and have no discernable characters. Done! It's the most viewed comic on the Internet.

How about a movie about two gay cowboys? Done! Academy Award!

How about a comedic TV show about a Nazi concentration camp? Done! It was called Hogan's Heroes and was a hit in its time.

How about a Broadway musical about a bunch of frickin' cats? Done!

You'd be hard pressed to come up with an idea so bad that it couldn't succeed with the right execution. And it would be even harder to imagine a great idea that couldn't fail if the execution were left to morons.